The bosses of Royal Bank of Scotland yesterday told shareholders for the first time that they were "sorry" for the plight of the Edinburgh-based bank which is likely to be 60%-owned by the government after a £20bn bail-out was endorsed by investors.

Addressing shareholders at a hastily convened meeting in Edinburgh, out-going chairman Sir Tom McKillop took personal responsibility as he said he was "profoundly sorry" for the situation that had forced the bank to accept the government rescue package.

In a candid address, McKillop, who will leave at next year's annual meeting, made it clear that the "buck stops with me as chairman".

Until yesterday Sir Fred Goodwin, the chief executive, had refused to utter the word sorry. On his last day in the job which will be taken over today by Stephen Hester, Goodwin responded to a question from a former employee who is also a shareholder by saying that he was "extremely sorry".

"Accountability has been allocated and fully accepted," said McKillop.

Shareholders overwhelmingly backed the fund-raising package under which the government will underwrite a £15bn share issue at 65p a share and buy £5bn of preference shares. The shares closed yesterday at 46p, up 3.7p indicating that the government could end up with a 58% stake in the bank unless the share price rises through 65p which might encourage existing investors to participate in the cash call.

In his address to investors, McKillop refused to admit that the acquisition of parts of Dutch bank ABN Amro at the height the credit crunch last year had caused the bank's problems. But he admitted that the deal - the biggest financial services takeover of all time - had "added to our difficulties".

"In retrospect that higher exposure to assets, which later became very difficult to trade ... increased the short-term vulnerability of the group to the financial crisis as it intensified this year," McKillop said.

He also admitted that the bank had been run on too low a capital base - what he called an "efficient balance sheet" - for too long. "Had we known the severe market dislocation and economic deterioration we would face, we would, of course, have built up larger capital reserves earlier," said McKillop.

This was a point picked up by shareholder Alan Jack who said a prudent bank should have build up a "buffer of capital". He accused the bank of adopting a "gung-ho attitude".

The bank had been forced into a record-breaking £12bn rights issue in April to shore up its balance sheet, but the deterioration in markets after that forced the government to devise its bank bail-out plan which will now involve a further £20bn being raised. The bank's shares have collapsed. Worth £60bn at its peak, RBS is now valued at a tenth of that.

McKillop was at pains to apologise to employees and customers. "I am sorry about the very real financial and therefore human cost that those who have invested in us now feel and recognise how seriously this has impacted shareholder confidence in RBS," he said.

A former chief executive of AstraZeneca, McKillop said: "In over 40 years of my working life I have had many difficult working experiences but none like this.

"The challenges we must now address as an institution, as a country and indeed as part of the world's financial system, are unprecedented," said McKillop.